What is Chapter 7 bankruptcy?

Answers

What is Chapter 7 bankruptcy?

Chapter 7 is a “liquidation bankruptcy”, which may require the sale of some property for the benefit of your creditors. You are entitled to keep “exempt” property (property protected by law from creditors). The trustee may sell any non-exempt (or unprotected) property to pay a dividend to your unsecured creditors in return for a discharge from your debt. Unsecured debts include credit cards, medical bills, utility bills, personal loans, auto deficiencies and some taxes. Prior to filing a bankruptcy case for you we will carefully review your assets with you and advise of any that may be subject to sale and what can be done to protect the asset prior to filing bankruptcy. [top]
Who can file a Chapter 7 bankruptcy?

An individual or business that is having financial difficulty, and has not filed for and received a chapter 7 discharge in the past eight years.

Individuals with primarily consumer debts will have income and expenses analyzed to determine if they can afford to pay their creditors. If they can pay creditors under the bankruptcy formula known as the means test then relief under chapter 7 is not available. The means test is designed to make debtors who have the ability to pay creditors all or part of the debt do so through a Chapter 13 instead of discharging all debts. [top]
How long does a Chapter 7 take?

Most chapter 7 cases take about 90 days from filing to discharge. Discharge means that most of the debts are cancelled. However, some debts are not cancelled and must be paid after discharge. Examples are past-due child support or alimopny, some taxes, student loans, traffic tickets, restitution, and court fines. Debts that are secured or when collateral (cars, home, household goods) is pledged are not cancelled in bankruptcy unless the collateral is surrendered to the lender.

Bankruptcy only discharges the past debts listed by the debtor on the bankruptcy petition. Future debts must be paid.

Please note a bankruptcy may remain on your credit report for 10 years. [top]